Lelde Smits:
Last time we spoke at the end of 2012 you slammed global stimulus
policies. In your view - has the situation improved or deteriorated over
the past year?

Marc Faber: That
depends for whom. Basically we have an economy that is very imbalanced,
a global economy that is very imbalanced. The rich have benefitted a
lot from the stimulus packages, both fiscal policies and monetary
policies. Whereas the average household hasn’t doesn’t done particularly
well. And, there is now a meaningful slowdown in emerging economies.

Lelde Smits:
You mention emerging markets, they have also felt the force of the
Fed’s decision to withdraw stimulus. What is the risk of more downside
and which economies do you think face the biggest threat?

Marc Faber: The
economies with the largest downside are countries like South Africa,
Brazil and Turkey. But, we could have a contagion and then other
emerging economies currencies could also weaken.

Lelde Smits: Which countries do you think are currently the most economically stable and which are really at threat of danger ahead?

Marc Faber: You’re asking which country is the least ugly?

Lelde Smits: Potentially, yes.

Marc Faber: I mean basically we have instability everywhere.

Lelde Smits: So there are no bright spots for you?

Marc Faber:
Well, in terms of investments the Vietnamese stock market has had a
very rough time between 2006 and last year. And, we’ve bottomed out both
economically and also in terms of asset prices, real-estate and stocks.
So I think that some money will be made in Vietnamese shares.

Lelde Smits: So will you be putting your money into Vietnam?

Marc Faber: Yes, we have already investments in Vietnam both in real estate and equities.

Lelde Smits:
If we look at more of your investment advice – Last time we spoke
[September 2012] you said, “The best performing asset class will
probably be real estate and precious metals”. Since then gold sank about
30 per cent over last year while home prices have continued to rise to
elevated levels around the world. How have your views changed over the
past year?

Marc Faber: Well
the problem with money printing is that it doesn’t lift all assets at
the same time. So yes we had a substantial gain in home prices in most
countries. And, I think that real estate is now world-wide at an
elevated level with few exceptions. But say in the US and in Australia
we are at very high levels. All have had a significant correction and I
think that we just bottomed out in the price of gold and in gold
shares.

Lelde Smits: How have you changed your exposure to both over the past year?

Marc Faber:
I have increased some real estate exposure in places where prices are
low, say in Thailand and Vietnam. On the other hand I have reduced, say,
my exposure to home builders in the United States and I have recently
increased my exposure to gold and gold shares.

Lelde Smits: Your
recent analysis has recommended 10-year treasuries for a short term
trade. What’s the rationale behind this recommendation when US interest
rates are sitting so low?

Marc Faber:
I think that there is a chance that when equity markets sell off there
will be a flight into quality away from risk and that treasuries could
benefit. So I am buying 10 year treasuries, or I bought them when the
yield was around 3 per cent in the belief that if stock markets go down
they will rally. And secondly, if the yield of the 10-year treasury
should rise to about 4/4.5 per cent I think it would knock off stock
markets.

Lelde Smits: Now Marc
you have also predicted equity markets are overdue for a correction of
between 20 to 30 per cent. Over what time frame are you expecting this
to play out?

Marc Faber: I
think this year will probably have a market correction that is more
meaningful in the US. We already have this 20 to 30 per cent correction
in emerging economies stock markets, but it hasn’t happened yet in the
US. So what you have is essentially the US marching up and emerging
markets moving down and I think a significant adjustment in the US is
likely to start this year.

Lelde Smits:
Finally Marc, you have previously said we are in a “gigantic financial
asset bubble”. What signs will you be looking at to indicate that the
bubble may be about to burst?

Marc Faber:
Well that is the tricky part of bubbles. They can get bigger before
they burst and it’s never crystal clear that they will burst. But,
according to William White who was at the BIS [Swiss-based Bank for
International Settlements] before, total credit in the world today as a
percent of world GDP is now 30 per cent higher than it was in 2007 when
the last crisis occurred because of excessive credit. So I think that
the global economy is extremely vulnerable as credit growth may slow
down.

Lelde Smits: Marc Faber, thank you as always for your insights today.

Marc Faber: Thank you very much for having me.

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.Dr. Doom also trades currencies and commodity futures like Gold and Oil.

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Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.Dr. Doom also trades currencies and commodity futures like Gold and Oil.

Marc Faber Issues Dire Warning of 40 Stock Market Crash Marc Faber is an international investor known for his uncanny predicti...

Dr Faber studied economics at the University of Zurich and, at the age of 24, obtained a PhD in economics. He publishes a widely read monthly investment newsletter The Gloom, Boom & Doom Report, which highlights unusual investment opportunities, and is the author of several books, including Tomorrow’s Gold – Asia’s Age of Discovery which was first published in 2002 and highlights future investment opportunities around the world. Tomorrow’s Gold was for several weeks on Amazon’s bestseller list and has been translated into Japanese, Korean, Thai and German. A regular speaker at various investment seminars, Dr Faber is well known for his contrarian investment approach. He is also associated with a variety of funds.

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Dr. Marc Faber Short Bio

Who is Marc Faber author of the Gloom, Boom and Doom report is a world class Investor, Doctor Faber 's typically controversial and contrarian views have earned him the label of Dr. Doom. Doctor Doom also trades currencies and commodity futures like Gold Natural Gas and Crude Oil.Even his harshest critics must admit that he's been unerringly correct in his market forecasts over the past three decades . Marc Faber is a Swiss investor.He was born in Zurich, Switzerland. He went to school in Geneva and Zurich and finished high school with the Matura. He studied Economics at the University of Zurich and, at the age of 24, obtained a PhD in Economics magna cum laude. Between 1970 and 1978, Dr Faber worked for White Weld & Company Limited in New York, Zurich and Hong Kong. Since 1973, he has lived in Hong Kong. From 1978 to February 1990, he was the Managing Director of Drexel Burnham Lambert (HK) Ltd. In June 1990, he set up his own business, which acts as an investment advisor and fund manager. Faber is publisher of the Gloom Boom & Doom Report newsletter and is the director of Marc Faber Ltd which acts as an investment advisor and fund manager.